BaoSteelLeanManufacturingDiagnosticStoryline¶BaoSteelcurrentlyfacessignificantchallengesinsatisfyinggrowing,demandinganddifferentiatedcustomerneedsinabidtobecomeworld-classsteelcompany.Asthekeybottleneckpartoftheproductionchain,currentHRCperformanceonassetproductivity,productqualityanddeliveryneedstobesignificantlyimprovedforBaoSteeltosecureandstrengthenitscompetitivepositiontogrowmarketshareinanincreasinglycompetitiveenvironmentBaoSteelispressuredtoboostitsassetutilizationtocapturemarketshareasdomesticandinternationaldemandforBaoSteelproductscontinuetogrow.–1580AssetUtilizationandOEEbreakdown–2050AssetUtilizationandOEEbreakdownBaoSteelhasbeentryinghardtokeepupwithincreasinglydemandingqualityrequirementandwillcontinuetobechallengedtoenhanceitsproductquality.–1580scraprate,downgraderate,reworkrate,customercomplaint(showincreaseoverlast12months)–2050scraprate,downgraderate,reworkrate,customercomplaint(showincreaseoverlast12months)BaoSteelisrequiredtoimproveitscurrentdeliveryperformanceinordertooffertailoredyetconsistentofferstovariouscustomersegmentstosecureandoptimizeitscustomerbase–Customerneedsfordeliveryperformancevarybysegment(e.g.,automotive,whitegoods,industrial…)–Currentsinglecoilmanufacturingleadtime(D41–D51)is12days;averageorder(1580&2050)manufacturingleadtimeis19dayswithafluctuationrangefrom0–200days.–CurrentOTIFperformanceis92%formonthlydeliveryand22%forweeklydelivery.¶BaoSteelHRCcouldrealizesignificantimprovementpotentialandresultingfinancialbenefitswithinandacrossassetproductivity,productqualityanddeliverybybothimplementingtargetednearterminitiativesandrigorouslyapplyingleantoolsandstructuredproblemsolvingapproachtopursue“Kaizen”.Tosupportleanmanufacturingimplementation,BaoSteelshouldalsostrengthenitsperformancemanagementandenhanceemployeeskillsthroughpracticalandtargetedtrainingprogram.RealizingimprovementpotentialinallareascouldleadtoanestimatedfinancialimpactofXXXUS$inYYYtimeframe.Assetproductivitycouldbeincreasedfromcurrentutilizationof%to%–Annualmaintenancetimefor1580couldbereducedfromcurrent350hours/yeartohours/yearby…–Annualmaintenancetimefor2050couldbereducedfromcurrent359.5hours/yeartohours/yearby…–Monthlymaintenancetimefor1580couldbereducedfromcurrent413.4hours/yeartohours/yearby…–Monthlymaintenancetimefor2050couldbereducedfromcurrent356.9hours/yeartohours/yearby…–Workrollchangesfor1580couldbereducedfromcurrent939.5hours/yeartohours/yearby…–Workrollchangesfor2050couldbereducedfromcurrent838.8hours/yeartohours/yearby…–Supportrollchangetimefor1580couldbereducedfromcurrenthours/yeartohours/yearby…–Supportrollchangetimefor2050couldbereducedfromcurrenthours/yeartohours/yearby…–Breakdowntimefor1580couldbereducedfromcurrenthours/yeartohours/yearby…–Breakdowntimefor1580couldbereducedfromcurrenthours/yeartohours/yearby…–YieldhaslimitedimprovementpotentialProductQualitycouldbeimprovedbyrigorouslyapplyingstandardizedproblemsolvingapproachandstandardizingsolution–Scrapratecouldbereducedfromcurrent%tothelowestthreemonthmovingaverageof%–Downgraderatecouldbereducedfromcurrent%tothelowestthreemonthmovingaverageof%–Reworkratecouldbereducedfromcurrent%tothelowestthreemonthmovingaverageof%–BaoSteelneedtomakeimprovementinqualitymanagementprocessestoconnectproblemsolvingandimplementationtostabilizeprocess–BaoSteelshouldrigorouslyapplystandardizedproblemsolvingtoolsacrossorganizationhierarchiestoensureproblemsolvingstability,whichwillleadtoprocessstabilityDeliveryPerformance–REDUCINGMEAN:Deliveryleadtimecouldbereducedbydays(forhotchargingwithnofinish)bystreamliningprocess:D14–D19(contractconformancechecktimereducedfromdaystohours),D19–D41(schedulingtimereducedfromdaystohours),D41–D51(coolingtimereducedfrom3daystohours),D51–D52(qualityapprovaltimereducedfrom2shiftstohours)–DIFFERENTIATINGMEANANDVARIABILITY:Forexample,fixschedulingforknownandongoingvolumeforcertainsteelgradestobuildcapabilitytodeliverTotalfinancialimpactof$couldbeachievedwithintimeframe–Assetproductivityincreaseof10%couldleadtoUS$incrementalprofit,(withlimitedinvestment?)–Productqualityimprovementduetoreductioninscraprate,downgraderateandreworkratecouldleadtoUS$incrementalprofit,withadditionalbenefittoreduceleadtime–Deliveryperformanceimprovement(definedasabilitytodeliverupto50%ofvolumewithinpromiseddayswhencustomerrequires)couldensuresuccessfulacquisitionandretentionofbestandstrategiccustomers.ItcouldalsogiveBaoSteeladditionalpricingleveragePerformancemanagementSkillEnhancement¶Wehaveprioritizedimprovementinitiativesbasedonfinancialimpactandeaseofimplementationindesigningthe3monthpilotplan.